Observations & Insight
Tech Surge: Nasdaq’s Lars Ottersgard on New Developments in the Technology Space
Nasdaq, the world’s first electronic stock market, is almost synonymous with technology, from listings to licensing. John Lothian News spoke with Lars Ottersgard, head of market technology at Nasdaq, at FIA Boca, about what they are providing to marketplaces, brokers, and corporates, and the areas of growth he sees in the tech sector.
Watch the video »
BATS Launches Options Market, Hires Senior NYSE Officer
BATS Global Markets Inc., one of the three main stock-exchange operators in the U.S., made aggressive moves against its competitors on Thursday as it seeks to gain market share in trading of options and exchange-traded funds.
In the morning, the company announced it would launch an options market, called EDGX Options, in November of this year. The new exchange is designed to directly compete with options exchanges run by Nasdaq OMX Group Inc. and International Securities Exchange.
***DA: Says Chris Concannon in the article, “BATS is firing on all cylinders.” That is better than firings in all business units, I guess.
32 Days Is a Long Time Without a Record for U.S. Stock Investors
Callie Bost – Bloomberg
A couple of paychecks, maybe a haircut and a trip to the movies — not much typically happens in a month. But for investors waiting for the next all-time high in U.S. stocks, it’s actually been a long time.
While equity indexes from Asia to Europe have climbed to multiyear highs in recent days, the Standard & Poor’s 500 Index and Dow Jones Industrial Average last hit theirs on March 2, the same day the Nasdaq Composite Index topped 5,000 for the first time in 15 years. The 32-day stretch without celebrating a fresh high is the S&P 500’s longest since July 2013.
***DA: We will not be setting any records for time between records any time soon. It wasn’t until 1954 that the Dow took out the 1929 high.
Goldman’s stock trading boom turns up heat on Morgan Stanley
Lauren Tara LaCapra – Reuters
Goldman Sachs Group Inc’s (GS.N) blockbuster performance in stock trading last quarter has some Wall Street watchers wondering whether it knocked rival Morgan Stanley (MS.N) out of the top spot in equities…
Goldman Chief Financial Officer Harvey Schwartz said there was particular strength in stock options and other equity derivatives, which perform well when markets move in surprising directions, as well as some large block trades performed for clients. Europe was a bright spot as the euro currency fell and stock markets rallied on actions by the European Central Bank.
***DA: I am more impressed when a firm does well in a market other than a raging bull.
BSE currency options segment largest in the world
Business Standard News
The BSE currency options segment has now become the largest in the world, after three consecutive months of highest volumes, in terms of contracts traded. The number of contracts traded in March touched 24.71 million, up from 19.11 million contracts in February 2015.
***DA: Amazing, until the onion is peeled back to reveal a contract size 1/125th those of the CME contracts.
Random Friday: Timing China’s Collapse, Backtesting, and Baseball
Adam Warner – Schaeffer’s Investment Research
It’s Friday, and volatility is firmly on the “eh” part of the continuum. So how about a few random thoughts? But first … Star Wars!
Anyway … we’re always on the lookout for counter-trend indicators. To me, the best sign a trend might continue occurs when there’s evidence that the masses don’t believe in the trend.
***DA: The trend is your friend til the end of the trend.
We’re on the Cusp of Volatility Moving Higher [Video]
RJ O’Brien and Associates Managing Director of Global Futures and Options John Brady discusses the U.S. markets and Greece’s debt crisis with Bloomberg’s Angie Lau on “First Up.”
Hillary Clinton Said to Hire Former Wall Street Cop as Campaign CFO
Hillary Clinton is planning to name Gary Gensler, a former top federal financial regulator and strong advocate for strict Wall Street rules, as the chief financial officer of her campaign, according to a Democrat familiar with the decision.
Gensler, in his role as chairman of the Commodity Futures Trading Commission, was a leading player in the drafting and then implementation of the Dodd-Frank Act, the financial rules that President Barack Obama signed into law in 2010 in the wake of the worst financial crisis since the Great Depression. Gensler also served in President Bill Clinton’s Treasury Department.
Shares fall on China margin crackdown, dollar gains
Herbert Lash – Reuters via The Fiscal Times
Global equity markets fell on Friday as a crackdown on margin lending in China sent ripples around the world, while the dollar gained on rising U.S. consumer price data that should keep the Federal Reserve on track to raise interest rates this year.
China’s securities regulator warned investors to be cautious as Chinese shares hit seven-year highs after seven weeks of gains. Retail investors are borrowing record amounts of money to buy stocks, which has pushed trading volumes to new highs.
India’s Central Bank Said to Oppose Overseas Settlement of Debt
India’s central bank is opposed to a proposal to allow overseas settlement of the nation’s sovereign debt because such a move could lead to higher currency volatility, people familiar with the matter said.
The Reserve Bank of India doesn’t favor the settlement of rupee bonds on Euroclear Bank SA or Clearstream Banking SA platforms, but wants foreigners to engage local custodians or depositories instead, the people said, asking not to be named as they aren’t authorized to speak to the media.
Regulation & Enforcement
JPMorgan adviser stole $20M from clients: feds
Kevin Dugan and Rich Calder – New York Post
A former JPMorgan Chase money manager with an otherwise spotless record stole $20 million from his clients over four years — and used the cash to pay bills, his mortgage and to invest in his own account, federal authorities alleged Thursday.
But the disgraced former financial adviser, Michael J. Oppenheim, couldn’t even enjoy much of the stolen loot as he lost nearly all the cash he invested by making wrong-way options plays in Apple, Tesla, Google and Netflix, according to court papers.
Trader Charged With Spoofing Market Loses Dismissal Bid
Andrew M Harris – Bloomberg
The first high-speed trader charged with a method of market manipulation known as spoofing lost a bid to dismiss the case based on an argument the new law is too vague to be enforced.
Michael Coscia was indicted last year under a federal statute tied to the 2010 Dodd-Frank financial industry reform legislation. He was charged with six counts of spoofing — the entering of buy and sell orders on a commodity exchange with the specific intent to cancel those orders before they’re filled.
Can’t Commit To Selling? Think Short Vertical Option Spread – Apple Inc. (NASDAQ:AAPL), Starbucks Corporation (NASDAQ:SBUX)
One of the primary advantages of option trading is the chance to define and potentially limit risk right up front.
That is, option traders target a trade that they believe puts them in a high-probability situation to make some money or limit potential downside. One way to do that is with short vertical spreads.
Under the Hood: Understanding Volatility and the VIX, Pt. 1
Mike Patton – ThinkAdvisor
Volatility is the antithesis of stability and is usually considered bad for stocks. Moreover, it doesn’t matter if volatility breeds uncertainty or if uncertainty fosters volatility; stock prices react poorly to both. Volatility also tends to be higher during a bear market than when stocks are rising. The importance of volatility has played a key role in the development of what we know as the VIX.
In this article, the first of two, we’ll discuss the background of the VIX, discover how it works, look at a few of its applications, and explore its potential to warn investors of an impending stock market correction.